Australia Pacific LNG Project. Appendix M - Greenhouse Gas Management Plan LNG Facility

Australia Pacific LNG Project Appendix M - Greenhouse Gas Management Plan LNG Facility

Disclaimer This report has been prepared on behalf of and for the exclusive use of Australia Pacific LNG Pty Limited, and is subject to and issued in accordance with the agreement between Australia Pacific LNG Pty Limited and WorleyParsons Services Pty Ltd. WorleyParsons Services Pty Ltd accepts no liability or responsibility whatsoever for it in respect of any use of or reliance upon this report by any third party. Copying this report without the permission of Australia Pacific LNG Pty Limited or WorleyParsons is not permitted. Revision 1 dated 22 November 2010 APLN-000-EN-R01-D-10176 Page iii

Contents 1. Introduction, purpose and scope... 1 2. Environmental Policy... 2 3. Planning... 3 3.1 Coordinator-General Imposed Conditions... 3 3.2 Environmental aspects... 3 3.3 Applicable legislation, standards and guidelines... 6 3.3.1 Commonwealth government policy position... 6 3.3.2 Commonwealth government legislation... 6 3.3.3 Queensland Government position... 9 3.4 Objectives and targets... 9 4. Implementation strategy... 14 4.1 Construction... 14 4.1.1 Reduction of GHGs during construction... 14 4.2 Operations... 14 4.2.1 Reduction of GHGs from turbines... 14 4.2.2 Reduction of GHGs from flaring... 15 4.2.3 Reduction of GHGs from venting and fugitive emissions... 16 4.2.4 Reduction of GHGs from LNG shipments... 16 4.2.5 GHG offset plan... 16 4.2.6 CO 2 recovery plan... 17 4.3 Resources, roles and responsibilities... 17 4.4 Documentation... 20 4.4.1 Record keeping under the NGER Act... 20 4.4.2 Record keeping under the under the EEO Act... 20 4.4.3 Record keeping in relation to the National Carbon Offset Standard... 21 5. Monitoring... 22 6. Reporting, auditing and review... 25 6.1 Reporting... 25 6.1.1 GHG reporting under the NGER Act... 25 Page iii

6.1.2 Energy Efficiency Opportunity Reporting... 30 6.1.3 Reporting under the National carbon offset standard... 33 6.2 Corrective actions... 34 6.3 Auditing... 34 6.4 Management Review... 34 7. References... 35 Figures Figure 6.1 National Greenhouse and Energy reporting thresholds for facilities and corporations... 27 Figure 6.2 Upper limits for amounts of GHGs and energy data that may be considered incidental.. 30 Figure 6.3 Process for EEO reporting... 31 Figure 6.4 EEO Assessment and Reporting Cycle... 33 Tables Table 3.1 Summary of potential impacts, their causes, mitigation and management measures and the residual risks... 4 Table 3.2 List of GHG objectives, targets and performance indicators... 10 Table 4.1 Staff roles and responsibilities in relation to GHG management... 18 Table 5.1 Monitoring activities for reportable GHG sources and emissions... 22 Table 5.2 Monitoring activities for some scope 3 GHG sources and emissions... 24 Page iv

1. Introduction The overall greenhouse gas (GHG) management objective is to contribute to reducing global GHG intensity by producing LNG which can substitute for higher GHG intensive fuels. Australia Pacific LNG will seek to minimise the GHG intensity of LNG production during construction, commissioning and operational phases of the LNG facility. This document describes Australia Pacific LNG s approach to GHG management by: Giving an overview of Australia Pacific LNG s environmental policy in relation to GHG management. Outlining the various GHG related environmental aspects associated with the activities and products of the LNG facility. Discussing the applicable Commonwealth and Queensland government policy and legislation. Discussing Australia Pacific LNG s objectives, targets and programmes for mitigating GHG emissions at the LNG facility during construction, commissioning, and operations phases. Describing the implementation and operation of the plan including who is responsible. Discussing additional GHG mitigation measures such as a biodiversity offset strategy which will generate GHG offsets. Describing the monitoring, evaluation and auditing to be undertaken to demonstrate that all construction, commissioning and operational activities comply with the requirements of this plan. Describing the management review and continuous improvement to be implemented. Page 1

2. Environmental Policy Australia Pacific LNG recognises that climate change poses significant risks to its business, but this also offers opportunities to improve environmental performance. Australia Pacific LNG will be proactive in building a business that will be well-positioned in a low-carbon economy. Origin s and ConocoPhillips established corporate strategies on climate change will underpin Australia Pacific LNG s response to the challenges of climate change. Origin has long recognised the need to address the global issues of climate change, and has built a business that is well-positioned in a more carbon-constrained regulatory, social and investment environment. Origin has a strong portfolio of natural gas reserves in Australia and New Zealand and invests in renewable energy sources including wind, solar and geothermal. Origin has developed a series of retail offerings, such as GreenPower, to encourage customer participation in GHG reductions. Origin has engaged strongly in the development of government policy in relation to mitigating GHG emissions and reducing the impacts of climate change. This includes contributions to the Garnaut Review (Garnaut 2008), the Carbon Pollution Reduction Scheme and other government processes, and participation in the media and public debate. Origin has also taken significant measures to understand and reduce its carbon footprint. With operations around the globe, ConocoPhillips seeks to encourage external policy measures at the international level that deliver the following principles: Slow, stop and ultimately reverse the rate of growth in global GHG emissions. Establish a value for carbon emissions, which is transparent and relatively stable and sufficient to drive the changed behaviours necessary to achieve targeted emissions reductions. Develop and deploy innovative technology to help avoid or mitigate GHG emissions at all stages of the product s life. Ensure energy efficiency is implemented at all stages of the product s life. Recognise consumer preference for reduced GHG-intensive consumption, and work towards meeting these expectations. Deploy carbon capture and storage as a practical near-term solution if technically and economically feasible. Develop processes that are less energy and material intensive. Build price of carbon into base-case business evaluations. Ensure energy and materials efficiency is part of the project development/value improvement processes. The project will use the commitment and technical strengths of both of its co-venturers to develop and implement a GHG management plan that includes GHG mitigation measures, monitoring, reporting, and assessment of business-specific actions. Page 2

3. Planning 3.1 Coordinator-General Imposed Conditions The Coordinator-General s Imposed Conditions describe the specific management objectives for the GHG management plan: To describe the GHG emissions policy. To describe the energy efficiency program. To describe the continuous improvement program. To describe the improvements in control systems. To develop a CO 2 recovery plan. 3.2 Environmental aspects Explicit throughout the terms of reference (TOR) for the environmental impact statement (EIS), Australia Pacific LNG was required to identify and manage any adverse construction, operation and decommissioning impacts that its coal seam gas (CSG) to liquefied natural gas (LNG) project may create. The identification and management of these impacts was undertaken through a risk assessment. Risk assessment is a process that evaluates the likelihood (probability and exposure) and consequences (magnitude) of positive and negative environmental effects occurring as a result of exposure to one or more hazards. The EIS for the LNG facility presented a risk assessment as part of the greenhouse gas assessment. The risk assessment identified each environmental aspect and the causes for the impact associated with each project aspect. The mitigation and management measures were described and the residual risk from each impact was assigned a rating if the impact materialised. The risk assessment was undertaken based on the project design developed in the EIS. Table 3.1 summarises the results of the risk assessment. The potential impact is the release of GHGs to the environment and their likely long-term impact on global climate change. The causes for the GHG emissions were found to have arisen from the construction and operation activities associated with the LNG facility. Mitigation measures were developed to specifically reduce GHG emissions from these sources and the residual risk was assessed. In general, the residual risk was found to be low or negligible for each impact. A risk matrix that describes each level of risk in terms of likelihood and consequence is given in the Table 4.6, Chapter 4, Volume 1 of the Australia Pacific LNG Project EIS. Page 3

GREENHOUSE GAS MANAGEMENT PLAN Table 3.1 Summary of potential impacts, their causes, mitigation and management measures and the residual risks Potential impacts Possible causes Mitigation and management measures Residual risk level GHG emissions to the Operation of construction machinery Optimise transport logistics to reduce energy consumption, and use fuel Low atmosphere; potential long term and transport equipment hauling efficient vehicles and machinery where practicable climate change impacts Operation of gas liquefaction facilities Use high efficiency turbines that produce lower GHG emissions. Low (power generation and refrigeration turbines) Install waste heat recovery units to meet the process heat requirements of the LNG facility Transportation of people, construction Optimise transport logistics to reduce energy consumption and use fuel Negligible materials and liquefied natural gas efficient ships Flaring and venting CSG during Reduce flaring by capturing liquefied natural gas boil off gases from normal Low maintenance and process upsets ship loading using boil-off gas compressors. Activating the spare gas compressor to avoid flaring when a compressor is Low down for maintenancedevelop and implement plans for preventative maintenance and operational efficiencies to reduce flaring Embedded energy in materials Consider less energy intensive construction materials during design phase Low of the Project GHG emissions from LNG facility Develop and implement a GHG management plan to monitor and assess Low processes and other indirect GHG emissions from the Project. Use this plan to define and execute emissions such as third party and actions to reduce GHG emissions worker transportation Land clearing releases CO 2 and Land clearing for construction of Progressively rehabilitate cleared areas as described in Volume 4 Chapter Low Page 4

GREENHOUSE GAS MANAGEMENT PLAN Potential impacts Possible causes Mitigation and management measures Residual risk level reduces CO 2 uptake project infrastructure 8 of the EIS. Develop biodiversity offset strategy which will generate GHG offsets Page 5

3.3 Applicable legislation, standards and guidelines The Commonwealth and Queensland governments have developed policy, strategy and legislation in relation to the management of GHGs. Much of the policy landscape is still uncertain, especially at the Commonwealth level. However, Australia Pacific LNG has taken a proactive approach to finding technological solutions to reducing its GHG emissions, as well as considering biodiversity offsets. Australia Pacific LNG has chosen this approach so that they will be well-positioned in terms of their GHG liabilities once the policy landscape is clear. 3.3.1 Commonwealth government policy position Prior to the 21 August 2010 Commonwealth election, the proposed carbon pollution reduction scheme (CPRS) was the Australian Government s central policy instrument for reducing the GHG emissions Australia produces. This was to be an emissions trading scheme in which GHG emissions would be capped, permits would be allocated up to the cap, and emissions permits would be traded. Liable entities would have been required to obtain carbon pollution permits to acquit their GHG emissions liabilities. The Commonwealth Government intended that the CPRS would commence on 1 July 2011. However the CPRS Bills were defeated in August and December 2009, and in May 2010 the CPRS was delayed until at least 2013. Since the 21 August 2010 Commonwealth election, the GHG policy landscape in relation to the remains CPRS uncertain. If the CPRS or similar scheme to regulate GHG emissions is introduced, Australia Pacific LNG will likely have a liability in respect of GHG emissions permits. Despite the policy uncertainties, the Commonwealth government has retained: A long term GHG reduction target of 60% of 2000 levels by 2050. An unconditional medium term GHG reduction target of 5% below 2000 levels by 2020. 3.3.2 Commonwealth government legislation The NGER Act (2007) The National Greenhouse and Energy Reporting Act 2007 (NGER Act) establishes a national framework for Australian corporations to report GHG emissions, and energy consumed and produced from 1 July 2008. The NGER Act and supporting systems are administered by the Commonwealth Department of Climate Change and Energy Efficiency. The NGER system was also designed to provide a robust database for the proposed CPRS. From 1 July 2008, corporations are required to report if: They control facilities that emit 25,000 tonnes or more GHGs in CO 2 -e units, or produce or consume 100 terajoules or more of energy. Their corporate group emits 50,000 tonnes CO 2 -e, or produces or consumes 200 terajoules or more of energy for 2010-11 and beyond. Page 6

Companies must register by 31 August and report by 31 October following the financial year in which they first exceed a threshold. A report must be submitted every year once registered even in those years where the threshold is not triggered. Origin and ConocoPhillips report under the National Greenhouse and Energy Reporting Act (2007), and so both partners in Australia Pacific LNG are familiar with the Act's requirements. Australia Pacific LNG proposes to use the NGER system under which the LNG facility will report its GHG emissions following project start-up. Refer to section 6 for details of NGERS reporting requirements. Energy Efficiency Opportunities Act (2006) The Energy Efficiency Opportunities Act 2006 (EEO Act) was introduced by the Department of Resources, Energy and Tourism (DRET). It requires significant energy users, consuming over 0.5 PJ per annum of energy, to take part in a transparent process of energy efficiency assessment and reporting. The program s requirements are set out in the legislation, which came into effect on 1 July 2006. Participants in the program are required to assess their energy use and report publicly on cost effective opportunities to improve energy efficiency. In particular, corporations must report publicly on opportunities with a financial payback period of less than four years. Australia Pacific LNG joint venture partners Origin Energy and ConocoPhillips have been reporting under the energy efficiencies opportunities scheme since 2006 and 2007 respectively, so both partners in Australia Pacific LNG are familiar with the scheme's requirements. Australia Pacific LNG proposes to use the EEO program to assess its energy use and to quantify the opportunities identified to save energy at the LNG facility following project start-up. Refer to section 6 for details of EEO reporting requirements. National Carbon Offset Standard (NCOS) NCOS is a voluntary standard that took effect from 1 July 2010. The NCOS is intended to provide a benchmark for consumers and businesses to assess claims of carbon neutrality or the credibility of offset products available for sale in the voluntary carbon market. The following units are currently accepted under the NCOS for the purposes of voluntary carbon offsetting: Carbon Pollution Reduction Scheme (CPRS) permits, known as Australian Emissions Units (AEUs), including those issued for forestry projects and any offsets allowed under the CPRS (if it is introduced). Other units accepted for compliance under the CPRS which include the following units generated under the United Nations Framework Convention on Climate Change (UNFCCC) flexible mechanisms: Certified Emissions Reductions (CERs), excluding temporary (tcers) and long term (lcers) CERs Emission Reduction Units (ERUs); and Removal Units (RMUs) Voluntary Emissions Reductions (VERs) issued by the Gold Standard Page 7

Voluntary Carbon Units (VCUs) issued by the Voluntary Carbon Standard, including credits issued for agriculture, forestry and other land use (AFOLU) and reduced emissions from deforestation and degradation (REDD) projects, where they apply methodologies approved by the Australian Government. Offsets generated from emissions sources in Australia not counted toward Australia s Kyoto Protocol target and using a methodology that has been approved by the Australian Government. Under the NCOS, offset projects may be developed within Australia from emissions sources and sinks currently not counted towards Australia s obligations under the Kyoto Protocol target, such as: Enhanced forest management (the management of forests established before 1990). Cropland and grazing land management (net greenhouse gas emissions from soil, including biochar, crops and vegetation on cropland and grazing land). Revegetation (establishment of vegetation that does not meet the Kyoto Protocol definitions of afforestation and reforestation). Methodologies for producing offsets from these emissions sources must be proposed and approved under the NCOS before offset projects can be implemented. Domestic offset projects must meet the following eligibility criteria: Additional - GHG reductions generated by the LNG facility must be beyond what would be required to meet regulatory obligations under any Australian laws or regulations or undertaken as part of business-as-usual investment. The level of additional emissions reductions generated by an offset project is the difference between the emissions associated with the LNG facility ( project emissions ) and emissions under a business-as-usual scenario. Permanent - GHG reductions must be permanent. In the case of sinks, this requires that the carbon stored is sequestered and will not be released into the atmosphere in the future. Measurable - methodologies used to quantify the amount of emissions reductions generated must be robust and based on a defensible scientific method. Methodologies must clearly define a boundary for the emissions reduction project, emissions sources and emissions factors and activity levels. They must specify the calculation of a baseline emissions forecast reflecting business-as-usual and the means of comparing it to expected emissions from the project to determine the carbon offsets generated. The methodology must specify the uncertainty associated with the calculation of offsets generated. It should also specify the risks associated with achieving the forecast abatement and how they will be managed. Transparent - consumers and other interested stakeholders must be able to examine information on domestic offset projects, including the applied methodology, emissions calculations and project monitoring arrangements, by accessing a publicly available website. The information provided should clarify data sources, exclusions, inclusions and assumptions. Independently audited - eligibility of methodologies, offset projects and GHG emissions reductions generated must be audited by an independent third party. Existence of a conflict of interest should be determined. Further information on audit requirements is provided under the Audit section. Page 8

Registered - emissions reduction units generated must be registered and tracked in a publicly transparent registry. The equivalent number of eligible units to offset the total emissions associated with any product or organisation (or specified part of an organisation) should be voluntarily surrendered and retired into a registry. Registry arrangements for the domestic offsets generated under the NCOS will be determined as part of the NCOS administrative framework. Administrative arrangements are yet to be finalised. The NCOS will be reviewed on an annual basis and updated as required to reflect changes in Australian standards and legislation, international standards, best practice, domestic and international carbon markets and international emissions accounting rules. 3.3.3 Queensland Government position The Queensland Government s ClimateSmart 2050 strategy (2007) outlines key long-term climate change targets. The Queensland Government has agreed to the national target of achieving a 60% reduction in national GHG emissions by 2050, compared with 2000 levels. This will involve cuts in GHG emissions of more than 30 Mt CO 2 -e over 10 years and save the Queensland economy about $80 million each year (Queensland Government 2007). To help achieve this target, the Queensland Government has developed the Queensland gas scheme, where Queensland electricity retailers and large users of electricity are required to source at least 13% of their electricity from gas-fired generators. The gas scheme is aimed at reducing Queensland s emission intensity from 0.917 tonnes CO 2 -e/mwh (2000-2001 levels) to 0.794 tonnes CO 2 -e/mwh by 2011-2012. The 13% target under this scheme has been increased to 15% by 2010 with the provision to increase it to 18% by 2020. It should be noted that the LNG facility will generate its own power from natural gas, which will assist the Queensland government to meet its 2020 objective of 18% power generated from natural gas. In 2008 the Queensland Government commenced a review of Queensland s climate change strategies in response to national and international developments in climate change science and policy. In August 2009, the Queensland Government released ClimateQ: toward a greener Queensland. This strategy consolidates and updates the policy approach outlined in ClimateSmart 2050 and Queensland's ClimateSmart Adaptation Plan 2007-12. The revised strategy presents investments and policies to ensure Queensland remains at the forefront of the national climate change response (Queensland Government 2009). 3.4 Objectives and targets The overall GHG management objective is to contribute to reducing global GHG intensity by producing LNG which can substitute for higher GHG intensive fuels. Australia Pacific LNG will seek to minimise the GHG intensity of LNG production during construction, commissioning and operational phases of the LNG facility. To minimise the GHG intensity of LNG production, the following objectives, targets and performance indicators are given in the table below. Page 9

GREENHOUSE GAS MANAGEMENT PLAN Table 3.2 List of GHG objectives, targets and performance indicators Project Phase Objective Target Performance indicator(s) Operation To minimise GHG emissions during LNG facility operation For operations at the LNG facility at Curtis Island, achieve a GHG intensity of 0.31 tonne CO 2-e/tonne LNG produced GHG intensity of LNG facility Measure GHG emissions of all operations and tonnes LNG produced Construction To use fuel efficient vehicles and machinery where practicable and optimise transport logistics (of people and equipment) to reduce fuel consumption For on-site diesel consumption for transport, achieve GHG emissions of approximately 15,000 tonnes CO 2-e per annum over the 4.75 year construction period For on-site diesel consumption for power generation, achieve GHG emissions of approximately 57,000 tonnes CO 2-e per annum over the 4.75 year construction period Annual volumes of diesel and other fuels consumed. Reporting volume of fuels consumed and GHG emissions under NGERS Design/Constru ction To reduce the use of energy intensive construction materials during design phase of the LNG facility Minimise the embedded energy related GHG emissions. As a guide, the lifecycle GHG emission intensities for the following materials are: Life cycle greenhouse gas emissions of major materials and their alternatives during the detailed design phase -galvanised steel; 2.7 kg CO 2-e/kg -concrete; 0.13 kg CO 2-e/kg -copper cable; 3.8 kg CO 2-e/kg -insulation; 1.35 kg CO 2-e/kg Note, these intensities will vary depending on the region in which the materials were produced. These intensities ignore transport-related emissions. Page 10

GREENHOUSE GAS MANAGEMENT PLAN Project Phase Objective Target Performance indicator(s) Construction To minimise land clearances during construction of LNG facility infrastructure to limit releases of GHGs Develop a biodiversity offset strategy which will generate GHG offsets such as biosequestration opportunities Progressively rehabilitate cleared areas Complete a review of practicable GHG offsets option completed prior to operations commencing Minimise the GHG emissions from land-clearing Offset all GHG emissions associated with land clearing and some of the other project emissions. Area of land to be cleared for construction GHG emissions associated with land clearing The number of GHG offsets created GHG offset study report and recommendations Progress selection and implementation of acceptable offset projects Commissioning To minimise GHG emissions from gas flaring Use less than the benchmark quantity of gas to start up each LNG train Fully assess the options of ground flaring versus elevated flaring during detailed design phase. Volume of gas flared. Option assessment report Operations To minimise GHG emissions from routine and non-routine gas flaring Achieve a GHG intensity of 0.015 tonnes CO 2-e/tonne LNG produced. This covers all flaring activities such as dry, wet, and marine flaring, and non-routine gas flaring. Reduce GHG emissions by approximately 100,000 tonnes CO 2-e per train per year by capturing LNG boil-off gases Volume of gas flared Reporting annual GHGs, and energy consumption and production for gas flaring under NGERS. Operations To reduce GHG emissions from refrigeration compressor and power generation turbines using high efficiency turbines. To be achieved by selecting generator and compressor turbines For the refrigerator compressors, reduce GHG emissions by 25% compared with commonly used Frame 5D turbines - achieve a GHG intensity of 0.2 tonnes CO 2-e/tonne LNG produced Volume of fuel gas consumed for power generation Audit assessments Page 11

GREENHOUSE GAS MANAGEMENT PLAN Project Phase Objective Target Performance indicator(s) based on benchmarked GHG emissions For the power generation turbines, achieve an intensity of Energy consumption and energy efficiency intensity, and perform optimisation of the 0.03 tonnes CO 2-e/tonne LNG produced reporting under the EEO Act number and mode of operation of the power generation turbines During periods where ship-loading is occurring, achieve an intensity of 0.055 tonnes CO 2-e/tonne LNG produced Annual reporting of GHGs (tonnes CO 2-e) and energy production and consumption from natural gas for combustion for power generation and refrigeration turbines under NGERS Operations To minimise GHG emissions from heating the hot oil and the dehydration systems using recovered waste heat Reduce GHG emissions by approximately 63,000 tonnes CO 2-e per train per annum Achieve an intensity of 0.004 tonnes CO 2-e/tonne LNG produced Audit assessments Energy consumption and energy efficiency reporting under the EEO Act Annual reporting of GHGs, and energy consumption and production data associated with the hot oil system under NGERS Operations To minimise GHG emissions from acid gas venting and GHG impurities in vented nitrogen Achieve an intensity of 0.03 tonnes CO 2-e/tonne LNG produced for vented acid gases Achieve an intensity of 0.015 tonnes CO 2-e/tonne LNG produced for vented nitrogen Volumes of gases vented Audit assessments Annual reporting of GHGs, and energy consumption and production data associated with the acid gas rejection unit under NGERS Operations To optimise LNG shipment logistics to reduce For ships powered by gas only, achieve a GHG intensity of Volume of fuel(s) consumed in shipping Page 12

GREENHOUSE GAS MANAGEMENT PLAN Project Phase Objective Target Performance indicator(s) energy consumption e.g. LNG ships and routes 0.43 kg CO 2-e/kWh of shipping power required. From the selected based on benchmarked fuel efficiency EIS, estimated 0.12 tonnes CO 2-e/tonne LNG shipped Dual fuel (fuel oil/gas) powered ships should achieve a GHG intensity of 0.53 kg CO 2-e/kWh of shipping power required. Fuel oil powered ships should achieve a GHG intensity of 0.63 kg CO 2-e/kWh of shipping power required Page 13

4. Implementation strategy 4.1 Construction 4.1.1 Reduction of GHGs during construction The GHG emissions will primarily arise from use of construction machinery and site vehicles, and vehicles used in transporting people and construction materials. Engineering controls include: Selecting fuel efficient vehicles and machinery. Assessment of construction techniques to determine the most fuel efficient and least GHG intensive methods, i.e. on-site versus modular construction. Assess alternative fuels will e.g. CNG, LNG, LPG and biodiesel versus diesel and petrol. As GHG emissions will arise from land-clearing for construction, cleared areas will be progressively rehabilitated. Operational controls include: Back-loading of trucks and sourcing materials and services from local suppliers. Operating the vehicles and machinery in a fuel efficient manner e.g. on-site vehicles to be operated at an optimal speed, and no idling for extended periods. 4.2 Operations 4.2.1 Reduction of GHGs from turbines Australia Pacific LNG has an objective to reduce the GHG intensity of its production processes. The liquefaction/refrigeration process is highly energy intensive and it is therefore a key area where energy efficiency improvements will focus on an ongoing basis. Annual baseline calculations of GHG emissions (tonnes CO 2 -e) from turbine exhaust stack emissions will be performed during first year of operations, to verify actual plant performance against design basis. Volume of fuel gas consumed will also be monitored. Frequency of testing will be adjusted based on results when compared to project design criteria and vendor equipment performance specifications. Engineering controls include: Install waste heat recovery units on gas turbine exhausts. This will provide heat for the hot oil system and the dehydration regeneration gas system for two of the refrigeration gas turbines. Use GE LM2500+G4 aero-derivative gas turbines are among the most fuel efficient turbines available. Frame 5D turbines operate with 30.3% thermal efficiency and the GE LM2500+G4 operate with 41.1% thermal efficiency. The GE LM2500+G4 produce 26% fewer GHG emissions. Page 14

Implement inlet air-cooling, which will improve the efficiency of the turbines over a wide range of operating temperatures and humidities. Operational controls include: Optimising the number, type and rating of power generation gas turbines depending on the optimisation of power requirements. Optimising turbine operating conditions, project phasing, reliability, GHG emissions and capital/operating costs. These optimisation processes will be part of a continuous improvement process. 4.2.2 Reduction of GHGs from flaring Australia Pacific LNG proposes to use a ground flare similar to that currently used at ConocoPhillips Darwin LNG facility. This type of flare burns more cleanly than the conventional elevated pipe flare and results in fewer GHG emissions overall. Australia Pacific LNG will perform a detailed comparison of ground and elevated flaring GHG emissions. An assessment report will be generated detailed the preferred options. During commissioning of each train, the amount of gas needed for train start-up will be carefully assessed to reduce GHGs from flaring. Baseline calculations of annual routine and non-routine flaring volumes will be conducted from the first year of operations to verify actual plant performance against design predictions. A comparison of actual versus predicted annual flaring volumes will be used to define total annual flaring volume reduction targets for subsequent years. Baseline calculations of annual routine and non-routine flaring contributions to GHG emissions (tonnes CO 2 -e) from first year of operations will be performed. This data will be used to verify actual plant performance against design GHG emissions calculations. The annual GHG intensity target (tonnes CO 2 -e)/tonne LNG production) for subsequent years will be defined on this basis Engineering controls include recovering the boil-off gas from LNG storage and ship loading rather than flaring it. Operational controls include: The Australia Pacific LNG Plant asset management system. A dry and wet flare system start-up and operating procedure. Marine flare start-up and operating procedure. Australia Pacific LNG Marine Terminal Handbook to minimise night-time flaring during LNG offloading. Activating the spare gas compressor to avoid flaring when a compressor is down for maintenance. A spare gas compressor will be piped into the system so that in the event of maintenance being required on the other compressors, the spare can be utilised instantly. This reduces GHG emissions by continuing gas compression rather than flaring the unused CSG. A leak detection program and a strategy to minimise plant shutdowns. Page 15

4.2.3 Reduction of GHGs from venting and fugitive emissions Fugitive emissions of methane arise from equipment including piping connectors, valves, pumps and flanges. Vented emissions arise from the acid gas rejection unit, the nitrogen rejection unit, and from equipment maintenance venting. Baseline calculation of annual routine and non-routine venting volumes will be conducted from first year of operations to verify actual plant performance against design predictions. A comparison of actual versus predicted annual vented volumes will be used to define total annual venting volume reduction targets for subsequent years. Baseline calculations of annual routine and non-routine venting contributions to GHG emissions (tonnes CO 2 -e) from first year of operations will be performed. This data will be used to verify actual plant performance against design GHG emissions calculations. The annual GHG intensity target (tonnes CO 2 -e)/tonne LNG production) for subsequent years will be defined on this basis. Engineering controls include: Thermally oxidising the methane in the rejected nitrogen stream. Thermally oxidising the methane in the rejected acid gas stream. Plant design (valve specifications, flange minimisation). It is proposed that regular energy audits be conducted to evaluate and benchmark energy use and to identify energy efficiency opportunities. These will be evaluated, and once developed; those opportunities with sound business cases will be implemented in accordance with Australia Pacific LNG s business plan and EEO guidelines. 4.2.4 Reduction of GHGs from LNG shipments LNG transport via ship is a large source of scope 3 emissions for Australia Pacific LNG. The estimates from the EIS suggested that GHGs from LNG shipments could be of the order of two million tonnes CO 2 -e annually. The key operational control will be to assess the ship s fuel efficiency. Heede (2006) developed GHG intensities for LNG shipping based on the GHGs per kwhr of power required for the journey, depending upon the fuels used. The following are GHG indicators of ship performance that could be used in ship selection (amongst others): As only: 0.43 kg CO 2 -e/kwhr. Dual fuel (fuel oil/gas): 0.53 kg CO 2 -e/kwhr. Fuel oil 0.63 kg CO 2 -e/kwhr. To further reduce fuel consumption and GHG emissions, routes to major ports will be optimised using satellite navigation/gps. 4.2.5 GHG offset plan It is expected that the GHGs associated with land clearing and some of the project emissions will be offset to some degree. Page 16

Review and evaluation of greenhouse gas emission offset opportunities will be an on-going part of the GHG management plan for the Australia Pacific LNG facility during its operational lifetime. Details of selected emission offset projects will be included in the strategy that will be submitted to the Commonwealth Department of Environment, Water, Heritage and the Arts (DEWHA), the Queensland Department of Environment and Resource Management (DERM) and the Department of Employment Economic Development and Innovations (DEEDI). These departments have confirmed that terrestrial and marine offsets will be required to compensate for significant unavoidable impacts of land-clearing. The key measures are to: Develop a biodiversity offset strategy which will generate GHG offsets such biosequestration projects. The offset strategy for domestic offsets will include an assessment of the additionality, permanency, measurability, transparency, independent auditing and registration of offsets as required under the National Carbon Offsets Standard. Prepare a GHG offset options study report prior to operations commencing at the LNG facility. Recommendations from the report will be used as the basis for selection and implementation of acceptable offset projects. Given the spatial extent of the Project and its various components, it is proposed that offset properties will be largely located within 100km of the study area defined in the EIS. 4.2.6 CO 2 recovery plan Before conversion to LNG, the coal seam gas contains about 1% CO 2. The current design uses a- MDEA to remove the CO 2 from the CSG. A CO 2 recovery plan will be developed that considers the following: A study to consider the options for enhanced recovery of CO 2 from the CSG e.g. using the latest alternative CO 2 absorbents. Solvents should avoid co-releases of methane. The installation of equipment which is carbon capture ready. However, at present there are there are no feasible reservoirs for CO 2 storage currently available. Develop an CSG-LNG industry response for CO 2 re-use. Consider feasibility of re-use options such as enhanced oil recovery or piping CO 2 back to CSG fields to enhance CSG recovery. Investigate synergies with local industries for CO 2 use. 4.3 Resources, roles and responsibilities Responsibility for day-to-day operations of the LNG facility will be assigned to the Australia Pacific LNG Environmental Manager. The Environmental Manager will be responsible for ensuring that the requirements of the Environmental Management Plan (EM Plan) and the Health, Safety and Environmental Management System (HSEMS) are effectively implemented. Technical support is provided by the Australia Pacific LNG Operations Team. This responsibility also includes the regular review and update of the EM Plan and other HSEMS documentation to ensure that they reflect current activities and policy requirements. Page 17

In relation to GHG reporting under the NGER Act and energy usage/energy efficiency reporting under the EEO Act, the roles and responsibilities for the following Australia Pacific LNG staff have been identified in Table 4.1 below. The specific GHGs to be reported and their frequency are described in more detail in Section 5. Specific reporting timelines under the EEO Act and the NGER Act are described in section 6. Table 4.1 Staff roles and responsibilities in relation to GHG management Reporting requirements Accountable Project leader Data to be gathered and reported Actions Energy Efficiency under the EEO Act LNG facility Operations Centre Manager Senior Process Engineer Energy usage data Identify and evaluate energy efficiency opportunities. Cost and payback periods for each opportunity Annual review of identified energy efficiency opportunities Conduct energy efficiency assessment Gather energy data and manage verification and audit of data Register to report if threshold is triggered GHG reporting under the NGER Act Internal report to Australia Pacific LNG Corporate HSE Manager Environmental Supervisor Volume of gas flared (routine and non-routine flaring) Volumes of gas from process venting (acid gas removal unit, NRU gas venting) Volumes of gases released from fugitive emissions from LNG processing equipment Collect relevant data, calculate GHG emissions, energy production and energy consumption data (see section 6 for details) using the GHG and energy reporting system. Volumes of fuel consumed (diesel and fuel gas) from power generation turbines, and refrigeration compressor gas turbines Volumes of fuel consumed (diesel and petrol) from site vehicles and construction machinery Register with Greenhouse and Energy Data Officer to report by 31 August in the year after NGER thresholds have been triggered. Manage verification audit of greenhouse and energy data prior to 31 October Page 18

Reporting requirements Accountable Project leader Data to be gathered and reported Actions Report data to the Department of Climate Change and Energy Efficiency by October 31 August in the year after NGER thresholds have been triggered Scope 3 GHGs for internal report to APLNG Corporate HSE Manager Environmental Supervisor Fuels consumed (fuel oil and natural gas) by LNG ships Masses of construction materials for embedded energy related GHG emissions; emission factors for each material Collect relevant data, calculate GHG emissions for internal reporting. Reporting GHG intensity to APLNG Corporate HSE Manager Environmental Supervisor All flaring activity, power generation turbines, and refrigeration compressors, process vents and fugitive emissions Volumes of gas vented. volumes of fuels combusted, production volumes (LNG, fuel gas) Calculate GHG Intensity (tonnes GHG emitted per tonne production). Publish data in the Annual report for preceding calendar year (1 January to 31 December) to be completed by 1 May Identifying GHG reduction opportunities LNG facility Operations Centre Manager Environmental Supervisor Identify GHG reduction opportunities via workshops Volume of GHG reductions Internal reporting on an Annual basis. Management Team to review opportunities to facilitate continuous improvement of the GHG Management Plan Carbon offset projects HSE Manager Environmental Supervisor Identify carbon offset projects Volume and type of offsets generated and purchased Manage offsets (purchase and retirement of offsets) Reporting offset activities Page 19

Reporting requirements Accountable Project leader Data to be gathered and reported Actions Manage verification and audit of offsetting projects 4.4 Documentation 4.4.1 Record keeping under the NGER Act Australia Pacific LNG will be required to keep records for seven years from the end of the reporting year in which the activities recorded took place. This means that records for the 2010 11 reporting year should be kept until the end of 2017 18. Records that will be kept include any information that can be used to verify the relevance, completeness, consistency, transparency and accuracy of reported data during an external audit. Records to be retained include: A list of all sources monitored. The activity data used for calculation of greenhouse gas emissions for each source, categorised by process and fuel or material type. Documentary evidence relating to calculations for example, receipts, invoices and details of payment methods. Documentation of the methods used for greenhouse gas emissions and energy estimations. Documents justifying selection of the monitoring methods chosen. Documentation of the collection process for activity data for a facility and its sources. Records supporting business decisions, especially for high-risk areas relating to reporting coverage and accuracy. When facility-specific emissions factors are used, records will document the monitoring methods used and the results from the development of these emissions factors, as well as information such as biomass fractions and oxidisation or conversion factors. Records can be kept on paper or in electronic form. They should, however, be stored in a format that is accessible to the Greenhouse and Energy Data Officer or external auditors if required. Australia Pacific LNG will consult AS ISO 15489 (the Australian and international standard for record management) for guidance about record-keeping processes. 4.4.2 Record keeping under the under the EEO Act Adequate records must be retained for seven years to demonstrate that Australia Pacific LNG has met the program requirements. Page 20

Records should include evidence gathered for the assessment and reporting schedule, assessments, reporting and any other documentation prepared for, or used in the participation of, Energy Efficiency Opportunities. The record keeping principles outlined under the NGER Act should apply to records obtained for reporting under the EEO Act. 4.4.3 Record keeping in relation to the National Carbon Offset Standard Australia Pacific LNG will keep records of and disclose the offset units in a registry and record appropriate details to verify this cancelling activity (i.e. registry name, serial number, cancellation certificate, etc). These details are required as part of the Public Disclosure Summary. Records will be kept to prove that sufficient eligible offsets have been acquired to offset the proportion of the total carbon footprint associated with the activities of the organisation (or specified part of the organisation) or products committed to be offset. Appropriate records will be maintained to allow emissions reductions claims under NCOS to be audited. For GHG inventory/carbon footprint verification purposes in relation to NCOS, records will be maintained including monitoring records, utility bills, test reports, failure reports, internal audit and management review records, customer complaints and statistics related to the operations and the manufacture of the product. The relevant NGER report can be used if it has been used to develop a carbon footprint. Page 21

5. Monitoring Monitoring activities will be undertaken throughout the life of the project to ensure that the objectives and targets are met. The activities below will be performed as part of the GHG monitoring program and energy-efficiency programs. Note that the data reported below are reportable emissions under the NGER system (i.e. for the LNG facility these are scope 1 from fuel combustion, fugitive and vented emissions), for which reporting is mandatory. GHG emissions calculations from purchased fuels like diesel will be based on the full fuel cycle emissions factors, which include scope 1 emissions due to combustion of the fuel and the scope 3 emissions from the extraction, production and transport of those fuels. The NGER reporting requirements are explained in more detail in Section 6.1.1. Table 5.1 Monitoring activities for reportable GHG sources and emissions Activity to be measured Frequency of monitoring Data evaluation method Data to be reported Operation of construction machinery, site vehicles and diesel fired power generators Monthly Fuel consumption from invoices Volumes of fuels consumed GHG emissions (tonnes): CO 2, CH 4, N 2O and CO 2-e Land clearing during construction Daily Mapping/geomatics-GIS Area of land cleared (hectares) and the vegetation types Emissions from landclearing in tonnes CO 2-e Gas flaring during plant commissioning Daily Calculations based on average design daily flowrates Volume of gas flared GHG emissions (tonnes): CO 2, CH 4, N 2O and CO 2-e Gas flared (routine flaring from dry and wet flares, purge and pilot gas flaring) Daily Calculations based on average design daily flowrates Volume of gas flared GHG emissions (tonnes): CO 2, CH 4, N 2O and CO 2-e Gas flared (non-routine flaring - process upsets, planned full or partial blowdowns, and emergency flaring from dry and wet flares) Per event Calculations based on continuous flow monitoring Volume of gas flared GHG emissions (tonnes): CO 2, CH 4, N 2O and CO 2-e Gas flared (routine flaring from marine flare flare Daily Calculations based on average design daily Volume of gas flared Page 22

Activity to be measured Frequency of monitoring Data evaluation method Data to be reported purge and pilots gas flaring flowrates GHG emissions (tonnes): CO 2, CH 4, N 2O and CO 2-e Gas flared (routine flaring from marine flares -ship cool-down and flaring during loading operations) Per loading event Calculations based on continuous flow monitoring Volume of gas flared GHG emissions (tonnes): CO 2, CH 4, N 2O and CO 2-e Non-routine gas flaring from marine flare Per event Calculations based on continuous flow monitoring Volume of gas flared GHG emissions (tonnes): CO 2, CH 4, N 2O and CO 2-e Process venting (acid gas removal unit, nitrogen rejection unit gas venting) Per event Calculations based on flow monitoring Volume of gas vented GHG emissions (tonnes): CO 2, and CH 4 and CO 2-e Fugitive emissions from LNG processing equipment Annual reporting Calculations based on fuel throughput tonnes CH 4 emitted Operation of power generation turbines, and refrigeration compressor gas turbines and provision of process heating from recovered waste heat Daily Flow metering and equipment run-time hours Fuel consumption (diesel and fuel gas) Energy consumption (TJ) GHG emissions (tonnes): CO 2, and CH 4 and CO 2-e All flaring activity, power generation turbines, and refrigeration compressors, process vents and fugitive emissions Monthly Reporting based on measurement and calculation Calculate GHG intensity: tonnes GHG in CO 2-e emitted per tonne production Australia Pacific LNG will consider reporting significant scope 3 emissions such as embedded energy related emissions and LNG shipping related emissions, as determined in the EIS. The monitoring activities required are listed below. Page 23

Table 5.2 Monitoring activities for some scope 3 GHG sources and emissions Activity to be measured Frequency of monitoring Data evaluation method Data to be reported Use of construction materials Monthly Data from invoices Emission factors for each material from databases Mass of construction materials used. Embedded energy related emissions in tonnes CO 2-e LNG shipping Annually Data from fuel invoices and quantity of LNG boil-off gas consumed during shipment Volumes of fuels consumed GHG emissions (tonnes): CO 2, CH 4, N 2O and CO 2-e Page 24

6. Reporting, auditing and review Reporting, auditing and reviews will be undertaken during the construction, commissioning and operations phases of the project. 6.1 Reporting List of required reports: GHG and energy reporting under the NGERs Act annual. Energy Efficiency Opportunities. Reporting under the National Carbon Offset Standard. Annual GHG and energy audits to assess opportunities for improvements in GHG intensity during facility life. Construction Contractor Environmental Manager will provide monthly updates to the Construction Contractor Site Manager on routine monitoring and auditing results Construction Contractor Site Manager to provide Australia Pacific LNG with periodic updates on routine monitoring and auditing results Non-routine monitoring and auditing results will be communicated by the Construction Contractor Site Manager to Australia Pacific LNG as they become available Data to be captured by internal GHG and energy data management and reporting system on a monthly basis: Flaring volumes from routine and non-routine processes All unplanned emergency flaring events Planned and unplanned venting volumes and fugitive emissions; and associated flaring events Fuel gas consumption for power generation turbines and refrigeration/compressor turbines; GHGs arising from power generation turbines and refrigeration/compressor turbines Diesel volumes and GHGs from combustion from power generation Diesel volumes and GHGs combustion for on-site transport and construction machinery Gasoline volumes and GHGs from combustion from on-site transport 6.1.1 GHG reporting under the NGER Act Australia Pacific LNG will use the National Greenhouse and Energy Reporting Guidelines to determine its reporting obligations under the NGER Act. Australia Pacific LNG will use the National Greenhouse and Energy Reporting (Measurement) Determination 2008 to quantify its GHG emissions. Page 25

Australia Pacific LNG will determine its participation by using its GHG and energy data management and reporting system to collate data on GHG emissions (GHG emissions will be calculated in units tonnes CO 2 -e) and offsets, and to review, verify and report this data under NGER Act. This system will also require contractors to provide a monthly report detailing a record of unplanned GHG releases. NGER GHG and energy reporting The thresholds for GHG and energy reporting are shown in Figure Figure 6.1. There are three types of facility thresholds: Combined scope 1 and scope 2 GHG emissions of 25 kilotonnes of CO 2 -e. Energy production of 100 terajoules. Energy consumption of 100 terajoules. If any one of these thresholds is met the Australia Pacific LNG will register and report all GHG emissions, energy produced and energy consumed. Scope 1 and scope 2 GHG emissions for the LNG facility are: Scope 1 GHGs arise from generation of heat and electricity from fuel (e.g. fuel gas, diesel and petrol) combustion; manufacturing processes that produce emissions; transport of materials, waste and people; fugitive or unintentional releases of greenhouse gases from pipes and joints; and flaring of gas. Scope 2 GHGs emissions arise from the generation of electricity purchased from the grid and consumed (if applicable). Energy production and energy consumption will also be reported in units of gigajoules or terajoules for all GHG generating activities except vented and flared GHGs. The GHGs to be reported are carbon dioxide (CO 2 ), methane (CH 4 ) and nitrous oxide (N 2 O). Hydrofluorocarbons from air conditioning and sulphur hexafluoride (SF 6 ) are also reportable. In the event that the thresholds are triggered, Australia Pacific LNG will be required to submit a report to the Greenhouse and Energy Data Officer using the OSCAR system. From the GHG assessment for the LNG facility performed in the EIS, it is likely that construction and commissioning activities alone will trigger the NGERS thresholds. Therefore, the GHG and energy data reporting system will be need to be established prior to commencement of construction and commissioning works. GHG and energy data during operations will be reported annually throughout the lifetime of the LNG facility. The timelines for registering and reporting under NGERS are also described in Figure 6.1 and will be discussed in more detail below. Australia Pacific LNG will apply for registration by the 31 August after the financial year in which a threshold is met. The Chief Executive Officer (or an authorised representative) of the controlling corporation must register on behalf of all businesses within the corporate group. Page 26

Figure 6.1 National Greenhouse and Energy reporting thresholds for facilities and corporations Reporting requirements for Joint Ventures In its first year of reporting under the NGER Act, Australia Pacific LNG, being a joint venture between CoP and Origin Energy, will resolve which of the JV partners will assume reporting responsibility, based on the following criteria. Under the NGER Act, an incorporated joint venture will not generally be taken as falling within the definition of joint venture. Only unincorporated joint ventures will fall within the definition of joint venture for the purposes of the NGER Act. If the JV is an incorporated JV and it fulfils the definition of a controlling corporation (under the Corporations Act 2001) it will be required to register and report in its own right. Where an incorporated joint venture falls within the definition of subsidiary, the joint venture company will be included in its parent company s corporate group. Only unincorporated joint ventures fall within the definition of a joint venture, these are the only types of arrangements where participants in a joint venture will be required to nominate a responsible reporting entity. Further details can be found in the NGER supplementary guidelines on joint ventures and defining a corporate group. Operational Control Australia Pacific LNG will also resolve the issue of which member has operational control over individual facilities. Obligations under the NGER Act are based on which members have operational control over facilities that meet a facility threshold or that contribute to meeting a corporate-level threshold. The concept of operational control will be used for allocating responsibility for reporting energy and GHG emissions data for the LNG facility. Page 27

A corporation is considered to have operational control over a facility if the member has authority to introduce and implement operating, health and safety, and environmental policies. Only one corporation can have operational control over a facility at any time. The corporation deemed to have operational control will be the one with the greatest authority to introduce and implement operating and environmental policies. If a third party is contracted to manage or operate a facility on behalf of the owner, it is expected that authority to introduce policies will be shared between the owner and the manager or operator according to conditions specified in the contract between the parties. The greatest authority to introduce policies is thus dependent on the contractual relationship between the parties. Facility definition The activities at the LNG facility represent a separate facility under the NGER Act because: The activities produce GHGs or produce or consume energy. The activities are part of a production process. The LNG production activities occur at a single site. The activities are attributable to a single industry sector. The facility reporting boundary for construction activities will include: Scope 1 emissions from diesel and gasoline combustion for on-site transport. Scope 1 emissions from diesel for power generation. GHG emissions from land clearing. GHG emissions from transport of workers, materials and equipment by third parties, waste disposal and embedded energy related emissions from construction materials are scope 3 emissions for the LNG facility and are not reportable under NGERs. The facility reporting boundary for operational activities will include: All fuel gas combustion by power generation and refrigeration/compressor turbines. All flaring and venting activities. All fugitive emissions from LNG processing. All diesel consumed by standby power generators. GHG emissions from LNG shipping, transport of workers, materials and equipment by third parties, and waste disposal are scope 3 emissions for the LNG facility and are not reportable under NGERs. GHG emissions and energy data from major contractors at a facility will be identified if the contractors activities emit 25 kilotonnes or more of CO 2 -e or consume or produce 100 terajoules or more of energy. GHG emissions and energy data from the entire facility will be reported initially by Australia Pacific LNG, with major contractor GHG emissions and energy data identified separately but attributed to the industry sector the facility data are reported against. Major contractors will be identified by their ABN (Australian Business Number). Page 28

Contractors activities the LNG facility that emits less than 25 kilotonnes of CO 2 -e or consumes or produces less than 100 terajoules of energy will not be identified separately. They are reportable by the JV member with operational control over the LNG facility. The GHG and energy data from the contractor s activities will be reported against (attributed to) the industry sector the facility reports against rather than construction or any other contractor activity. Contractors GHG and energy data will be reported under the Australia Pacific LNG GHG and energy data management and reporting system. GHG and energy reporting principles The NGER (Measurement) Determination 2008 sets out the following general principles for measuring emissions: Transparency - emission estimates must be documented and verifiable. Comparability - emission estimates using a particular method and produced by a registered corporation in an industry sector must be comparable with emission estimates produced by similar corporations in that industry sector using the same method and consistent with the emission estimates published by the Department of Climate Change in the National Greenhouse Accounts. Accuracy- uncertainties in emission estimates must be minimised and any estimates must neither be over nor under estimates of the true values at a 95 per cent confidence level. Completeness. All identifiable emission sources within the energy, industrial process and waste sectors as identified by the National Inventory Report must be accounted for. Estimates of GHG emissions and energy production and consumption will be prepared in accordance with these principles. Calculating GHG and energy data The National Greenhouse and Energy Reporting (Measurement) Determination 2008 outlines four methods that can be used to estimate GHG emissions and energy produced or consumed. Australia Pacific LNG will report on the methods used. Broadly, the four methods are as follows: Method 1 - the default methods, derived directly from the methods used for the National Greenhouse Accounts and the same as those used in OSCA. Method 2 - a facility-specific method using industry sampling and Australian or international standards listed in the Determination or equivalent for analysis. Method 3 - a facility-specific method using Australian or international standards listed in the Determination or equivalent standards for both sampling and analysis of fuels and raw materials. Method 3 is very similar to method 2, but it requires reporters to comply with Australian or equivalent documentary standards for sampling. Method 4 - direct monitoring of emission systems, on either a continuous or a periodic basis. One method for a GHG source must be used for 4 reporting years unless a higher order method is used. Page 29

A detailed GHG measurement plan based on the four reporting methods under the National Greenhouse and Energy Reporting (Measurement) Determination 2008 will be developed for each GHG source. Estimating incidental greenhouse gas emissions and energy Incidental greenhouse gas emissions and energy are small sources of GHGs or energy at a facility. If GHGs or energy sources from a facility are incidental, the Australia Pacific LNG will estimate the amounts using its an internally developed methodology. Figure 6.2 indicates the upper limits for GHG emissions and energy data. Incidental GHGs will be separated by source; energy produced or consumed (divided by energy type). GHGs and energy data may be treated as incidental only if more accurate estimation is difficult or expensive. The data is not otherwise required for reporting in another government program. Figure 6.2 Upper limits for amounts of GHGs and energy data that may be considered incidental Reporting GHG emissions to the Greenhouse and Energy Data Officer Once registered, Australia Pacific LNG will submit a Corporate report (inclusive of all reportable emissions from upstream and downstream sources) by 31 October following the reporting period (financial year). Australia Pacific LNG will report GHG emissions and energy data for the financial year during which it first meets a threshold. A report will be provided to the Greenhouse and Energy Data Officer for every year after the year the thresholds are first met. GHG emissions and energy data reports will be lodged on the federal government s OSCAR (the Online System for Comprehensive Activity Reporting), administered by the Commonwealth Department of Climate Change and Energy Efficiency. 6.1.2 Energy Efficiency Opportunity Reporting The five steps for reporting Energy Efficiency Opportunities is given in Figure 6.3. Page 30

Figure 6.3 Process for EEO reporting Determine participation If Australia Pacific LNG on a corporate level (inclusive of upstream and downstream activities) uses more than 0.5PJ of energy in a financial year, it will participate in Energy Efficiency Opportunities. The responsibility for participating in Energy Efficiency Opportunities rests with the controlling corporation. Register with the Department of Resources, Energy and Tourism Registration will be undertaken within nine months following the end of the financial year in which the energy use of the corporate group exceeds 0.5PJ. That year is referred to as the trigger year. The Chief Executive Officer (or an authorised representative) of the controlling corporation must register on behalf of all businesses within the corporate group. Prepare an assessment and reporting schedule After registering, Australia Pacific LNG will prepare an assessment and reporting schedule (termed Assessment Plan in the legislation). The scope of the assessment will include the LNG facility only. This schedule will be submitted to the Department within 18 months following the end of the trigger year. An assessment and reporting schedule covers a five-year assessment cycle and will comprise: An outline of corporate structure and related information. Current energy use and savings data. An assessment schedule outlining how and when Australia Pacific LNG will conduct assessments. A reporting schedule outlining how, where, and when the Australia Pacific LNG intends to report to the Department and to the public. Page 31

An assessment and reporting schedule will be submitted within 18 months of the end of the trigger year. For example, if the trigger year is 2012-13, the assessment and schedule must be submitted by 31 December 2014. Schedules for second and subsequent cycles will be submitted within 18 months of the end of the previous cycle. Conduct assessments Energy use will be assessed to identify cost effective opportunities for improving energy efficiency with up to four year paybacks. Australia Pacific LNG will ensure that each member of the corporate group that is scheduled to conduct assessments completes its first assessment for at least one site, key activity or business unit within the first two years of the assessment cycle. The Australia Pacific LNG will ensure that at least 80% (current reporting cycle; 90% in subsequent cycles) of its total energy use is assessed, including all sites that use more than 0.5PJ per year, within the five year assessment cycle. Energy use data collected as part of the assessment will be accurate to within ±5%. If an accuracy level of ±5% accuracy cannot be met, Australia Pacific LNG will apply in their schedule to report less accurate energy use data. To ensure assessments are rigorous and comprehensive, the minimum standard detailed in the Assessment Framework will be met. The key elements of the Assessment Framework are: Leadership support for the assessment and the improvement of energy use. The involvement of a range of skilled and experienced people, and people with a direct and indirect influence on energy use during the assessment process. Information and data that is appropriately, comprehensively and accurately measured and analysed. A process to identify, investigate and evaluate energy efficiency opportunities with paybacks of four years or less. Business decision making and planning for opportunities that are to be implemented or investigated further. Communicating the outcomes of the assessment and the investment decisions made regarding the opportunities identified and proposed business response, to senior management, the board and personnel involved. Report on assessment outcomes and business response Australia Pacific LNG will publicly report the outcomes of the first assessment or assessments, including their business response, within 15 months of the first assessment s completion. Annual updates of further assessments and business responses will be provided. Australia Pacific LNG will ensure that public reports will be readily available to investors, shareholders, other key stakeholders and interested members of the public. Typically, ConocoPhillips have included them in annual financial or other similar reports. Page 32

Australia Pacific LNG will also report to the Department on the outcomes and the business response to the assessments by the time their first public report is made, and again within six months of the end of the assessment cycle. Figure 6.4 gives a summary of the EEO program cycle. Figure 6.4 EEO Assessment and Reporting Cycle 6.1.3 Reporting under the National carbon offset standard Australia Pacific LNG will issue a periodic report that may be made publicly available on a website to communicate progress on emissions reduction activities and carbon offsetting of carbon neutral organisations and products. The periodic report will be made against an Emissions Management Plan and should include the following: The total carbon footprint of the activities of the organisation (or specified part of the organisation) or the product sold in the given period, including any actions taken to reduce total greenhouse gas emissions before offsetting. A statement on the emissions reduction activities undertaken in accordance with the emissions reduction strategy and the resulting quantity of emissions reduced. Records to prove that sufficient eligible offsets have been acquired to offset the proportion of the total carbon footprint associated with the activities of the organisation (or specified part of the organisation) or products committed to be offset. Page 33